The Online Student’s Guide to Financial Aid

While an online education is often more affordable than an on-campus education, it still helps to have financial aid. Even with lower tuition costs and potentially lower living expenses, going to college online costs thousands of dollars. And unless you can cough up the money for your tuition, fees, books, and living expenses right now, financial aid is a must.

We’re going to cover everything you need to know about financial aid, but for starters, we’ve got to talk about the most important piece of the financial aid puzzle: FAFSA.

FAFSA: How you know what you’re eligible for

Hopefully, you’ve heard of the Free Application for Federal Student Aid. It’s a pretty big deal. If you’re a college student, or getting ready to become one, you need to fill this out. It takes some time. It’s a little tedious. But without FAFSA, you literally have no idea what you’re missing. The U.S. Department of Education uses FAFSA to gather information about you and your financial situation, and then they show you just about everything you’re eligible to apply for—whether that’s grants, scholarships, loans, or work studies.

It doesn’t matter if you or your parents are wealthy. Or if your grades or bad. Or even if you’re old. If you need help paying for school, you’ve got to fill this out. You can apply any time between October and June, but keep in mind that you might be eligible for state student aid as well, and every state has its own deadline. And since some financial aid opportunities are first-come, first-served, you’ll want to apply early.

FAFSA is your single greatest tool for finding help to pay for college. And if you haven’t filled this out, a lot of need-based scholarships won’t let you apply—even if you have a greater financial need than anyone else who applies. FAFSA is the proof.

Depending on the type of financial aid you receive, you may or may not need to pay it off later. But before you start looking into the kinds of financial aid, there are a few things that affect what you may be eligible for.

Factors that affect financial aid

It might be easy to think “I’m a good student, I’m going to college, and I’m not rich, so I should get financial aid.” But that’s not how it works. Financial aid eligibility looks at more than just your financial need. It also depends on:

Your school’s accreditation

Your enrollment status

Being registered for selective service

Academic progress

It’s OK if none of that makes any sense right now. We’ll walk you through it.

School accreditation

Accreditation is a stamp of approval that says, “This school is legitimate.” There are many organizations that provide accreditation, and they all have slightly different standards. Many of them are highly respected in the academic world. But a lot of them aren’t.

Fake or sketchy accrediting bodies exist for the sole purpose of making illegitimate schools look credible. These schools may as well say, “My mom approves,” because their accreditation is worthless.

Online students are some of the most vulnerable targets for “degree mills” and education-related scams. These shady “schools” know most people have no idea what accreditation is or why it matters, and they’re more than willing to take advantage of that ignorance.

If the organization that accredited your school isn’t approved by one of these organizations, you’re going to have a much harder time getting help to pay for school. You won’t be eligible for any financial aid from the government, no matter how great your financial need is. It’s like asking them to pay your neighbor thousands of dollars to make you a YouTube star.

Enrollment status

This is pretty straightforward. Full-time students are eligible for more financial help than part-time students. While being full-time means you’ll finish your degree faster, it’s a trade-off. It’s harder to pay for school on your own when all your time is taken up by classes and studying.

There are plenty of people who work full-time and go to school full-time, but at the very least, that’s a huge logistical challenge. You may have to choose between missing class or missing a shift. But even if you can juggle the two schedules, your studies are bound to suffer because you have less energy to devote to school. That’s why full time students tend to have greater eligibility for financial aid.

Since part-time students presumably have a greater opportunity to work and find ways to pay for school on their own (and statistically, are less likely to graduate), they’re eligible for fewer financial aid opportunities. (Unless there are other factors in play, which we’ll cover shortly.)

If you plan to be a part-time student and you need financial aid, make sure you qualify as at least “half-time” to maximize your financial aid options.

Selective service

If you’re a male human living in the U.S. over 18, you are required by federal law to register for selective service (whether you’re a legal resident or not!). This means you’re eligible for a draft, if the U.S. ever has one. There hasn’t been a draft since 1973, but registering for selective service makes sure that if it were to happen, the “lottery” would be fair.

Registering for selective service doesn’t mean you’re joining the armed forces. Even if we have a draft and you get selected, it doesn’t mean you’re automatically in the military.

According to the government, about 10% of eligible men aren’t registered. None of those people can receive federal financial aid. So if you want to see if you can get help paying for school, make sure you’re registered.

And since this is the law anyways, you really shouldn’t let this step deter you from pursuing financial aid, or higher education.

Academic progress

As you work towards your degree, you have to “keep up” if you want to stay eligible for financial aid. “Academic progress” means something a little different at every school, but basically, if you aren’t meeting your school’s standards for staying on track, it may change whether or not you can receive financial aid.

What’s different about financial aid for online students?

While the process of applying for student aid is the same for online and on-campus students (*cough* FAFSA), there are some additional considerations online students need to be aware of.

Not every distance learning program is eligible for financial aid

I know we talked about accreditation already, but there’s something else you should know: even if on-campus programs are eligible for financial aid, the online programs might not be.

Schools are usually pretty good about telling you what kinds of financial aid their programs are eligible for. (They have a lot of incentive to do so.) Some schools make it easier to find financial aid information than tuition costs! Like a sneaky salesperson who tells you how much you save before saying the price . . .

But if a school doesn’t have a dedicated website or hub for their distance education programs, it might be hard to tell if their online degree programs are eligible for the same financial aid opportunities as their on-campus programs. If you’re ever unsure, call the school’s financial aid office.

Most online students are “nontraditional” students

“Traditional” students live on campus and go to school full-time and don’t have other major commitments—like taking care of a family or working full-time. “Nontraditional” students meet at least one of these criteria:

They go to school part-time

They have a full-time job

They qualify as independents (meaning they can’t be claimed as a dependent by a parent or guardian)

So here’s what that means when it comes to financial aid: some scholarships and grants are exclusively available to people who meet some of these criteria. You may find, for example, that there are unique opportunities for you as a single parent or as a student who also works full-time.

Being a nontraditional student often plays to your advantage when it comes to financial aid unless you’re a part-time student. There are still plenty of opportunities for part-time students, but some sources of financial aid require you to be at least a “half-time” student.

Types of financial aid available to online students

Online students can receive financial aid from federal and state government organizations as well as colleges and private or nonprofit institutions. It can come from pretty much anywhere, really.

Federal student aid

Every year, the U.S. Department of Education awards more than $120 billion in work-study funds, grants, scholarships, and loans to over 13 million students.

They produced this short video to give you an overview of the basic financial aid options they provide:

Grants

Grants are one of the best kind of financial aid you can receive. Unlike most other options, you don’t have to pay grants back—unless you do something weird like drop out before finishing a semester. The government won’t fall for the old “take the money and run” trick.

There are a lot of similarities between grants and scholarships, but one distinction is that grants are usually need-based, and scholarships are often at least somewhat merit-based.

Loans

The Department of Education offers some of the best interest rates you’re going to find on student loans. Plus, you don’t have to start paying them back until at least six months after you finish school, and there are other opportunities you won’t get from private lenders.

Depending on how great your financial need is, you may need to take out several different types of student loans. Here are the kinds of loans the federal government offers students:

Direct subsidized loans: These are need-based loans, and they’re the best kind to have. These loans are subsidized, and as a result, they don’t usually accumulate interest while you’re going to school (which, unfortunately, all other loans do).

Direct unsubsidized loans: These loans aren’t need-based, so anyone who’s eligible for financial aid can apply for them. They have the same interest rates as subsidized loans, but they begin accumulating interest immediately. So a $5,000 unsubsidized loan is going to cost you more than a $5,000 subsidized loan, even though they have the same interest rate. You can, however, receive unsubsidized loans for much greater amounts.

Direct PLUS loans: These loans aren’t need based, and they are the worst student loans the federal government offers. You shouldn’t use these unless you really need to. They have higher interest rates, require a credit check, and if you’re a dependent, then the loan is made out to your guardian(s), not you. OK, maybe that part is a good thing. But your parents won’t be happy about it. These loans cover anything that isn’t already covered by your other financial aid options.

Direct consolidation loans: These loans exist to make your life easier if you had to take out multiple loans. They combine them all into one, with a single loan provider. This doesn’t mean you’ll only have one interest rate, just that you’ll make one payment every month. This is a pretty big convenience, but it can also drag out your payments over a longer period, which means you wind up paying more interest.

Federal Perkins loans: These loans depend on your financial need and your school. Your school is the lender, so if they don’t have the funds available, you can’t get one. The interest rates are only a little bit higher than direct subsidized/unsubsidized loans.

Work study programs

A work study program is a need-based opportunity that gives you a part-time job to help pay for school. These jobs are provided through schools, so your school has to participate in the Federal Work Study program in order for you to qualify.

How much you’re awarded depends on three things:

When you apply (work study programs are first-come, first-served).

How great your financial need is.

How much funding your school has for the program.

Through a work study program, you could get a job working for the school, working for a non-profit or public agency, or working for a private organization in a position that’s relevant to your degree program.

Work study programs aren’t “free money” like a scholarship or a grant, but they have one distinct advantage you won’t get from any other type of financial aid: you get a job. This obviously isn’t going to be your dream job. It might even be terrible. But it can still provide you with skills and experience you can put on your resume or work into a cover letter. Depending on the type of job you get, you could even have some valuable networking opportunities.

State financial aid

State governments generally provide the same kinds of financial aid opportunities as the federal government: grants, loans, and work studies. You’ll automatically find out if you’re eligible for most of these when you fill out your FAFSA.

Take note though: every state has a different application deadline, and if you miss it, there are no redos. You can check out your state’s financial aid office to find out when your deadline is.

College-specific financial aid

Odds are, your college has connections to scholarships and other financial aid opportunities that are only available to students at your school. Some of them may only be available to students in particular programs or departments. And if it doesn’t explicitly say online students are eligible, you’ll want to check with your school’s financial aid department to confirm which scholarships you can apply for.

Scholarships

Scholarships can come from government agencies, nonprofits, private companies, and organizations of all sizes. Who’s eligible completely depends on the scholarship. For most scholarships though, you at least have to be a U.S. resident and enrolled (or soon to be enrolled) in a college of some sort.

Some scholarships are merit-based, meaning the most qualified candidate—based on the scholarship organization’s criteria and the judge’s evaluation of the candidate’s application—gets the award. Others are random drawings where everyone who applies has an equal chance of winning. Some are need-based. Others a combination of need and merit-based.

However you get them, all scholarships share one thing in common: you don’t have to pay them back. So that’s pretty neat.

Seriously, fill out the FAFSA ASAP

A few minutes ago, you were wandering around the Internet hoping to find out about financial aid opportunities for college. Now that you have a better idea of what’s out there, you may as well actually find out what you’re eligible for.

If you don’t have time to apply for FAFSA right now (or if the application period is closed), set a reminder in your phone or write it into your schedule.

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Ryan Nelson

Ryan has a B.A. in English Literature from Western Washington University. If he could rewind and go to college all over again, he'd do it a little differently. For now, he's living vicariously through people like you by helping you find the best online schools for your field.